Resolute Forest Products sues for $70M over Port Hawkesbury aid

The federal government said Thursday it will mount avigorous defence against a $70-million claim for compensation thatResolute Forest Products plans to file under the North American FreeTrade Agreement.

The Montreal-based company said late Wednesday thatit's seeking compensation for losses from the closure of its
Laurentide mill in Quebec.

• Port Hawkesbury Paper used 'unfair competition,' U.S. body rules

Resolute says the closure of its mill in Shawinigan, Que., was aresult of competition from a rival paper mill in Port Hawkesbury,N.S., that reopened in 2012 with provincial government assistance.

Under NAFTA rules, the federal government is responsible for actstaken by provincial governments.

"The government of Canada is currently assessing the informationprovided in the notice of arbitration under NAFTA Chapter 11 asfiled by the (Resolute) on Dec 30, 2015," the Global AffairsDepartment said in an email Thursday.

"The government of Canada will vigorously defend this case."

The provincial government issued a similar statement saying itwill defend Nova Scotia's interests in the case.

The Port Hawkesbury mill, idled for about a year before it waspurchased by Pacific West Commercial for $33 million, restarted withprovincial government aid of more than $124 million over 10 years.

That was in addition to $36.8 million the Nova Scotia governmentspent keeping the mill in a so-called hot idle state before strikingthe deal with Pacific West Commercial.

Resolute contends that the government assistance to Pacific WestCommercial led to the closure of its Laurentide mill in October 2014after 126 years of operation. The company had also laid off 111employees in late 2012 after it permanently shut down a papermachine at the plant following a drop in demand.

In addition to claiming direct losses of some $70 million,Resolute is seeking unspecified consequential damages "and
additional costs and relief deemed just and appropriate by anarbitral tribunal."